Thank you for holding, and welcome everyone to the Burlington Stores Fiscal 2023 second quarter operating results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question again, press the star one. We ask that you limit yourself to one question and one follow-up. Thank you. I will now turn the call over to David Glick, Group Senior Vice President, Investor Relations, and Treasurer. Mr. Glick, please go ahead. Thank you, operator, and good morning, everyone. We appreciate everyone's participation in today's conference call to discuss Burlington's fiscal 2023 second quarter operating results. Our presenters today are Michael O'Sullivan, our Chief Executive Officer, and Kristin Wolfe, our EVP and Chief Financial Officer. Before I turn the call over to Michael, I would like to inform listeners that this call may not be transcribed, recorded, or broadcast without our express permission. A replay of the call will be available until August 31, 2023. We take no responsibility for inaccuracies that may appear in transcripts of this call by third parties. Our remarks in the Q&A that follows are copyrighted today by Burlington Stores. Remarks made on this call concerning future expectations, events, strategies, objectives, trends, or projected financial results are subject to certain risks and uncertainties. Actual results may differ materially from those that are projected in such forward-looking statements. Such risks and uncertainties include those that are described in the company's 10-K for fiscal 2022 and in other filings with the SEC, all of which are expressly incorporated herein by reference. Please note that the financial results and expectations we've discussed today are on a continuing operations basis. Reconciliations of the non-GAAP measures we discussed today to GAAP measures are included in today's press release. Now, here's Michael. Thank you, David. Good morning, everyone, and thank you for joining us. I would like to cover three topics this morning. Firstly, I will discuss our second quarter results. Secondly, I will share our outlook for the rest of the year. And thirdly, I will talk about our new store opening program. Then I will hand the call over to Kristin to walk through the financial details. Okay, let's talk about our Q2 results. Comp store sales for the second quarter increased 4% versus our guidance of 2%-4%. This represents 3% comp store sales growth versus 2019 on a geometric stack basis. This was very similar to our trend in Q1, and it means that for the spring season as a whole, our comp store sales growth was 4% on a one-year and 3% on a four-year geometric stack basis. We are a little disappointed with these numbers. As we came into 2023, we guided to 3%-5% comp growth. Year to date, on a four-year basis, we are at the low end of this range. We had hoped to do better. As discussed previously, we believe the key external factor negatively influencing our underlying sales trend is the health of the low-income shopper, our core customer. This demographic continues to be under significant economic pressure. Increases in the cost of living, which had a huge impact on this customer's discretionary spending last year, have moderated somewhat, but of course, these costs are still going up. Add to that, these lower-income shoppers have been impacted by lower benefits and lower tax refunds in the first half of 2023. Overall, while there has been some moderation in the headwinds facing this customer, their discretionary spending is still significantly constrained. Our strategy with this customer has been to focus on great value, especially at opening price points. We are pleased with our execution of this strategy. We are driving strong turns and margins at these price points, but this is an area where we can and must continue to improve. As any off-price merchant will tell you, showing value at opening price points is one of the most difficult things to do. It's not just about price, it's about offering fashion, quality, and even a great brand at these low opening prices. I feel much better about our values at opening price points now than I did last year, but these values are really critical to our core customer, so we need to get even better and sharper in all aspects of opening price point value. As we have said before, this economic cycle has been unusual in that while low-income shoppers, our core customers, have been impacted by inflation, other demographic groups, higher income groups, have been relatively unscathed.... Coming into 2023, we thought it was possible that if the overall economy slowed down, then we might see more trade-down traffic in our stores, and this could potentially offset some of the weakness among our lower-income customers. Our strategy for going after these trade-down shoppers has been to increase the mix of recognizable brands and to offer great value across good, better, best price points within the assortment. Our merchants have done a nice job executing this strategy. The mix of recognizable brands is much higher now than last year, and our values are significantly stronger. Again, this is a strategy that we need to continue to push and improve. Our good, better, best value strategy has been helped by the fact that there is a very strong availability of off-price branded merchandise. This strong supply environment means that not only have we been able to increase a mix of recognizable brands at great value, but as Kristin will describe later in the call, we have also been able to drive up our merchant margins. Although we feel good about our execution of this strategy, we have not seen as much trade-down activity in our stores as we would have liked. The fact is that the overall economy has not slowed down significantly. Unemployment levels remain low. We have seen some trade-down traffic, but so far, the impact of this on our trend has been lower than in previous cycles. Let me move on now and talk about our outlook for the rest of the year. It is important to start by putting our year-to-date comp trend into context with our expectations coming into the year. Our comp guidance for the full year was 3%-5% on a one-year, and similarly, 3%-5% on a four-year geometric stack basis. This guidance was predicated on three things. Number one, improved execution, which we feel like we've achieved. Number two, some moderation in the impact of inflation on lower-income households. As described a moment ago, this has happened, but it has been partially offset by lower benefits, payments, and tax refunds. The lower-income shopper is still struggling. Number three, an increase in trade-down traffic in our stores, driven by a slowdown in the economy. Again, as described earlier, the overall economy has not really slowed down. Our actual year-to-date comp growth of 3% on a four-year basis is at the lower end of our full-year comp guidance range. We are disappointed with this year-to-date trend, but given the commentary that I have just provided, this trend makes sense. We are now planning the full season based on 2%-4% geometric comp stack. The midpoint of this range is what we have achieved year to date. This means that we are narrowing our full-year comp guidance versus 2022, from a range of 3%-5% to a range of 3%-4%. In a moment, Kristin will break out the guidance to Q3 and Q4, and she will explain that we are applying the same logic, the same 2%-4% geometric stack to both quarters. Again, our year-to-date comp trend is the midpoint of this range. Kristin will also discuss the earnings implications of this comp guidance. But before we go there, I would like to provide a brief update on our new store opening program. We are by far the smallest of the major off-price retailers, and as discussed previously, we believe that we have a significant opportunity to increase our store count. Also, as discussed previously, we are very excited about our smaller store prototype. For a number of historical reasons, our stores have always been much larger than our peers, and they have tended to be in less well trafficked, less visible, and less desirable locations. As a result, our sales productivity per sq ft and our individual store economics are inferior to our off-price peers. In addition to adding new stores, we have an opportunity to relocate and downsize many of our older and less productive locations. Our stated goal has been to open in excess of 100 net new stores a year, but given the lack of real estate availability over the last few years, we have struggled to hit this number. As we announced in March, this year, we expect to open between 70 and 80 net new stores. I'm glad to say that the supply of great real estate locations has opened up significantly over the last several months, driven especially by the winding down of Bed Bath & Beyond. There are two main implications of this that I would like to discuss. Firstly, we have acquired 62 store leases directly from Bed Bath & Beyond. It is unusual for us to acquire leases from another retailer, even in a bankruptcy. We would typically wait until the store locations revert back to the landlord. The benefit of acquiring leases directly is that we get to cherry-pick the locations that we're most interested in. The downside is that as soon as we acquire the lease, we start paying rent, even though it may take six to nine months to prepare the location and open the store. In a moment, Kristin will provide details on these expenses. Given the timing, we do not expect these stores to have a material impact on our net new store count or on our total sales this year. These stores will largely benefit us in 2024. Secondly, in addition to these 62 stores, there are many other former Bed Bath & Beyond locations that may be of interest to us once they are returned to their landlord in the bankruptcy process. So as we look at our pipeline of store locations, we are now much more confident in our ability to open the number of new stores that we would like in 2024. At this point, it is too early to provide specifics on our 2024 new store opening program. We will do that at a later time. Now, I would like to turn the call over to Kristin. Thank you, Michael, and good morning, everyone. I will start with some additional financial details on Q2, then I will move on to our outlook for the rest of the year. Total sales in the quarter were up 9%, while comparable store sales were up 4%. This means that for the spring season as a whole, our comparable store sales have grown 4% on a one-year basis and 3% on a four-year geometric stack basis. The gross margin rate in Q2 was 41.7%, an increase of 280 basis points versus 2022's second quarter gross margin rate of 38.9%. This was driven by a merchandise margin improvement of 150 basis points and a 130 basis point decrease in freight expense. The higher merchandise margin was driven by higher markup, lower markdowns, and by lower shortage expense versus Q2 of last year. The higher markup reflects the very strong off-price buying environment that Michael described earlier. Product sourcing costs were $183 million versus $157 million in the second quarter of 2022, increasing 50 basis points as a percentage of sales. Buying expense and supply chain costs both contributed to this deleverage. Adjusted SG&A was $587 million versus $518 million in 2022, increasing 90 basis points as a percentage of sales, largely in line with our expectations, driven primarily by the timing of marketing spend, higher store-related costs, and higher corporate expense. The Bed Bath & Beyond leases had a 10 basis point negative impact on adjusted SG&A in the second quarter. Adjusted EBIT Margin was 3.1%, 100 basis points higher than the second quarter of 2022. Excluding the impact of the recently acquired Bed Bath & Beyond leases, Adjusted EBIT Margin would have been 110 basis points higher than the second quarter of 2022. All of this resulted in diluted earnings per share of $0.47 versus $0.18 in the second quarter of 2022. Adjusted diluted earnings per share were $0.60 versus $0.35 in the second quarter of 2022. The Bed Bath & Beyond related expenses had a $0.03 negative impact on the adjusted earnings per share in the quarter. At the end of the quarter, our in-store inventories increased by approximately 1% on a comparable store basis. At the end of Q2, Reserve Inventory represented 45% of our inventory, versus 52% last year. In 2022, we had built up our short stay Reserve Inventory due to the lingering supply chain delays, which are not impacting us this year. Therefore, we are able to carry a lower level of Reserve Inventory while still taking advantage of a very strong buying environment. As a point of comparison, our Reserve Inventory is still significantly ahead of pre-pandemic levels, up nearly 90% since 2019. This reflects the fact that, compared with our history, we are making much greater use of Reserve Inventory to chase off-price buying opportunities and hold for later release. During the quarter, we opened 6 net new stores, bringing our store count at the end of the second quarter to 939 stores. This included 9 new store openings and three relocations or closures. Now, I will turn to our updated outlook for fiscal 2023. Please note that the following guidance excludes costs associated with the leases on 62 stores recently acquired from Bed Bath & Beyond. These expenses, primarily dark rent, will negatively impact the third and fourth quarters of fiscal 2023 by $0.11 and $0.09 per share, respectively. Together with the $0.03 impact incurred in the second quarter, this translates to an expected full year negative impact from Bed Bath & Beyond lease acquisitions of $0.23 per share. As Michael described, based on how these store leases were acquired, we immediately incur expenses for these stores while we are remodeling and converting. Revenues and profit from these stores will largely benefit us in fiscal 2024. Of course, this timing was factored into our detailed financial assessment of these lease acquisitions. These store locations have strong pro forma economics and are in locations or strip malls where we would otherwise have a difficult time finding a suitable new store opportunity. We are very excited to be adding these store locations to our network. We are updating our full year sales and earnings guidance as follows: We now expect full year fiscal 2023 sales to increase 11%-12%, which includes a comp sales outlook of up 3%-4%. Based on this comp sales outlook, we expect our adjusted EBIT margin to increase by 80-100 basis points, and our adjusted earnings per share to be in the range of $5.60-$5.90, which compares to our previous guidance of $5.50-$6.00, issued back in March. As a reminder, this guidance excludes the impact of the $21 million of expenses relating to our acquisition of Bed Bath & Beyond leases and includes $0.05 of earnings per share from the 53rd week. As Michael mentioned, we are planning a 2%-4% increase for the fall season on a four-year geometric stack basis. The midpoint of this range is what we've achieved year to date. For the third quarter, we are guiding to a one-year comp sales increase of +5% to +7%, which on a four-year geometric stack basis translates to a 2%-4% increase. Based on this comp sales outlook, we expect operating margin expansion of 170 basis points to 220 basis points versus Q3 of 2022, and adjusted earnings per share guidance to be in the range of $0.97-$1.12. For the fourth quarter, our updated full year outlook implies comp store sales of -2% to flat, which again, is based on a +2% to +4% four-year geometric comp stack. Based on that outlook, on a 13-week basis, we expect Q4 adjusted EBIT margin to be flat to up 40 basis points, and adjusted earnings per share guidance to be in the range of $3.10-$3.25. When including the 5-cent benefit from the 53rd week, we expect adjusted earnings per share for the fourth quarter to be in the range of $3.15-$3.30. I will now turn the call back to Michael. Thank you, Kristin. Before we open up the call to questions, I would like to summarize some key points from today's call. Firstly, for the spring season as a whole, we achieved 4% comp growth on a one-year basis. This represents a 3% geometric comp stack. We are a little disappointed with these results. We are happy with our major strategies, but coming into the year, we had hoped that external factors would be more favorable. In particular, it is clear that the low-income shopper, our core customer, is still struggling. Secondly, looking forward to the second half of the year, we are adjusting our guidance to line up with our year-to-date trend. The midpoint of our guidance range for Q3 and Q4 is a 3% geometric stack comp, the same as our year-to-date trend. If the underlying trend is stronger, then we are ready to chase it. Thirdly, we are very excited about the opportunities that have opened up to expand our new store and our store relocation programs. We are by far the smallest of the major off-price retailers, and historically, our stores have been physically larger than our peers and have had poorer economics. The increased supply of attractive real estate locations gives us more confidence in our ability to achieve our new store opening targets over the next few years. At this point, I would like to turn the call over to the operator for your questions. Certainly. At this time, if you'd like to ask a question, please press star one on your telephone keypad. Again, that's star one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up... Matthew Boss with JPMorgan, your line is open. Thanks. Good morning, and congrats on a nice quarter. Thanks, Matt. So, Michael, larger picture, maybe compared to broader retail, the big three off-price retailers reported healthy same-store sales year to date. I guess, what's your assessment of how off-price is performing relative to other retail channels? And any commentary on the relative performance among the major off-price retailers? Well, good morning, Matt. Thank you for the question. I think the first thing I would say is I agree with you. Off-price looks like maybe it's starting to pull away from traditional retail. You know, on a one-year basis, year to date, comp performance for the major off-price retailers has been in the mid- to high-single-digit range, positive high- to mid- to high-single-digit range. Whereas for department and specialty stores, it looks like it's mostly been negative. I don't think that that's too surprising. It feels like perhaps we're starting to revert to the longer-term structural trends that prevailed before the pandemic, where off-price, over many years, gained share at the expense of other bricks-and-mortar retail. I think, like I say, I think maybe that's what we're going back to. The second point I would make, though, is that within off-price, there continues to be a fairly significant divergence in relative comp performance between the off-price chains, especially when you compare us all on a multi-year basis. When you look at the numbers, you know, we at Burlington, we're at the lower end of that performance range. I think that the factor that perhaps best explains that relative performance is the difference in core customer profiles between the different retailers. You know, those differences didn't really matter historically, but in the last 18 months, lower income shoppers have been differentially impacted by the higher cost of living and by the scaling down of pandemic era benefits. You know, our strength at Burlington, our strength is with shoppers who are younger, lower income, and more ethnically diverse. In the longer term, this is a really great core customer. But since early 2022, these shoppers have really been struggling. You know, when you look at other discretionary retailers that serve lower income customers, I think you see the same pattern. You know, we all performed differentially well in 2021, and then we've all performed differentially poorly since early 2022. And I think that correlates with the spending power of lower income shoppers. But let me wrap up my answer by making one final point. I like that our off-price peers are doing well. It gives me encouragement. Burlington 2.0 is all about becoming more off-price. The strong performance of our peers demonstrates, if you like, the art of the possible in off-price. You know, we know that right now we're facing, you know, strong customer headwinds, but and we have been since early 2022, but those headwinds are not going to last. And the strong performance of our peers, you know, gives me confidence in off-price, but it also suggests that we have a big opportunity once the discretionary spending of our core customer begins to recover from this inflationary cycle. That's great color. Maybe, Michael, just to follow up on your back half guidance. So the logic of basing the forecast on the year to date, multi-year comp trend, it makes sense and seems as if you've de-risked the guide. But relative to some other retailers that actually raised the back half and four Q assumptions, are there any specific concerns that are causing you to be more cautious? There were really two factors that drove our thinking on the updated guidance. Number one, our year-to-date comp trend on a four-year stack basis is 3%. It was 3% in Q1, and it was 3% in Q2. So it feels reasonable to reset our guidance for Q3 and Q4 based on this year-to-date, four-year stack trend. You know, Q3 of last year was our weakest quarter, so that logic means that mathematically, our Q3 one-year comp guidance is 5%-7%. Again, consistent with the multi-year trend we've seen year-to-date. I should also add that we are--we're very happy with our sales trend, August month-to-date, and you know, that trend gives us further confidence in the guide. That said, of course, we're only three weeks into the quarter. The second factor that drove our thinking on our back half guidance is that we know that if the trend turns out to be stronger, then we can chase it. In fact, my assessment is that we always perform better when we plan cautiously and then chase. You know, that puts us in a stronger position to respond to what the customer is telling us. And, you know, in this environment where availability is exceptionally strong, we know we can find great merchandise to support a stronger trend. Now, in your question, you asked whether there's anything specific, any specific concerns we have that are making us cautious, and the direct answer is no. You know, of course, there are risks, the impact of student loan repayments or, you know, unpredictable weather in October, but we don't have any special insight or intelligence into those. You know, our thinking on guidance was much more straightforward. It's based on year-to-date trend and confidence that we can chase the trend if it turns out to be stronger. ... Great color. Best of luck. Thank you. Ike Boruchow with Wells Fargo, your line is open. Hey, good morning. Thanks for taking my question. Actually, I have two questions for Kristin, both on the new stores. I guess firstly, can you, can you provide any detail on your expectations in terms of new store economics? And I guess, in particular, as you, as you're opening more stores over the next few years, how should we be modeling things like new store volumes, you know, four wall margins, margin impact of the stores? Just things like that would be helpful. Great. Thanks, Ike. Good morning. Appreciate the question. I'll first speak to new store sales volumes and then speak to the margin impact of new stores. On sales, for modeling purposes, you should assume that on average, new stores will have sales volumes of about 70% of an average store in their first full year. This equates to about $7 million in sales. And then these new stores will then slightly outperform the chain in terms of comp growth for the first few years. On the margin side, while there may be a handful of exceptions, but we typically only approve a new store location if we believe it will be accretive to our overall operating margin in year two. And the hurdle we use here is based on our 2019 operating margin. And of course, it's not just about operating margin. We also apply an IRR hurdle. On average, new stores have a very attractive IRR. As we've shifted our new store openings towards a greater mix of the smaller prototype locations, we've seen an increase in both sales productivity as measured by sales per square foot, but also in operating margin per store. The smaller prototype locations, they have superior economics to our older, oversized stores. So with that said, though, it's important to point out that when you segment our overall store base, it's still the case that approximately 80% of our stores are larger than 30,000 sq ft, and about half of our stores are larger than 45,000 sq ft. So we still have a lot of oversized and less productive stores in our chain. That's one of the reasons why we're very excited about the expansion of our new store opening program. Got it. And then, I guess, staying on the topic of new stores, Kristin, curious, have you done any analysis on the degree to which the new stores kinda cannibalize your existing stores? You know, I guess specifically, as the number of store openings increase, will that create a headwind to comp growth? How do you think about cannibalization? Great. Actually, it's a good question. It's something we've looked at. Of course, as you indicated, we know that as we open new stores, we cannibalize older existing stores to some degree. The cannibalization effect is relatively modest, though, when you compare with the incremental sales volume that a new store generates. I can share some additional data here. Over the last four years, we've opened about 250 net new stores. These stores represent about 30% of our 2023 year-to-date sales. And we estimate that this group of stores has cannibalized sales in our existing stores by about 3-4 percentage points since 2019. In other words, new stores have represented a headwind of about a point of comp each year since 2019. But again, the incremental sales from new stores have far outweighed the cannibalization impact. I think the last part of your question was getting at what happens as we ramp up new store openings. Of course, we anticipate that that comp headwind will increase. It's very likely it could exceed a point of comp each year over the next couple of years, but again, the total sales benefit will be significantly higher. Got it. Very helpful. Thanks. Thanks, Ike. Thank you. Lorraine Hutchinson with Bank of America, your line is open. Thank you. Good morning. Kristin, you said in your prepared remarks that shortage was favorable in the second quarter, which is very different to the broader trend across retail. Can you talk through the reasons for this improved shortage? Good morning, Lorraine. Thanks for the question. You're right. In the prepared remarks, I noted our shortage expense was lower on a year-over-year basis. This was because of the adjustment we made to our shortage accrual in the second quarter of last year, based on that quarter's physical inventory. Last year's adjustment was a function of a higher accrual in Q2, as well as a catch-up accrual in Q1 of last year. This had a negative impact last year, and the anniversary of this accrual is what drives some gross margin leverage in the second quarter of this year. So that said, we had expected an improvement in our shortage results based on this quarter's physical inventory. Unfortunately, we did not see the benefit we were expecting, as the retail industry-wide shrink challenges continue and just have not abated. So while we did see a year-over-year shrink benefit in Q2 as compared to the significant headwind we incurred last year, it was just not as much of a benefit as we expected. Fortunately, our improvement in merch margin, taking out the impact of the shrink change, still enabled us to have a strong merch margin performance in the quarter. And then I'll just last point, want to acknowledge that we continue to take steps to control shortage and continue to make significant investments in shortage control initiatives. We believe, based on these continued investments, we can mitigate the higher shrink rate over time. Thank you. My second question is for Michael about the Bed Bath stores. Can you provide any more details on these stores? What kind of process did you go through to select the locations? And also, what kind of financial hurdles did you apply? Thank you. Well, good morning, Lorraine. ... We looked very closely at all of the available Bed Bath & Beyond stores. As I'm sure you know, there were several hundred stores. We had a large internal team of people, real estate experts and legal and finance experts that pored over the data. Yeah, typically, in a retail bankruptcy, the majority of store leases revert back to the landlords. In fact, it's usually our preference to deal with the underlying landlord. That said, it's not uncommon in a bankruptcy process for many locations to be picked off before then. You know, if a retailer has a strong interest in a particular location, then it makes sense to acquire it directly rather than to wait. Now, there were several specific criteria that we used to identify the Bed Bath & Beyond stores that we were most interested in. Those included non-financial and financial criteria. The non-financial criteria covered things like strategic factors. For example, is the site in a strategically important location or market? It also covered competitive and, I would say, location-specific factors. For example, you know, do we like the demographics of that trade area, and what do we think of the co-tenants? And then thirdly, we looked at whether or not the site would still likely be available to us if we just waited for it to revert to the landlord. We then, having looked at those non-financial factors, layered on all of the financial analysis that you would expect. We looked at rent levels, including the dark rent that we would incur before the store would open. We looked at expected sales volumes for the store, projected operating margins, CapEx requirements, and perhaps most important of all, we looked at the expected rate of return versus our hurdle. And so based on all those factors, we identified the stores that we were most interested in acquiring directly from Bed Bath & Beyond. I would say that was a fairly rigorous process, and we're very happy with the stores that we came away with. I'd also make the point that many other former Bed Bath & Beyond stores will now revert to the landlords, and it's likely that we will pursue many of those stores, again, directly with the landlords over the next couple of years. Those locations would just form part of our normal new store pipeline. Before I leave this question, though, there probably is one point of clarification that I should make. We may be able to open some of the newly acquired Bed Bath & Beyond stores this fiscal year. As you'd expect, given the fact that we are incurring occupancy costs on those locations, if we have an incentive, we will push to get them open as soon as possible. But in prioritizing those stores, it may mean letting some of our non-Bed Bath & Beyond openings slip to early next year. So that's the reason we're saying that we don't expect these newly acquired Bed Bath & Beyond stores to have a material impact on our net new store count or on our total sales in 2023. These stores are really gonna largely benefit us in 2024. Thank you. Thank you. John Kernan with TD Cowen, your line is open. Good morning, everyone. I have a couple of model questions for Kristin. Just first, on Q2, the comp growth for the quarter was at the high end of the guidance. Operating margin was also well ahead of the 10-50 basis points you had originally guided to. EPS was ahead of guidance. Can you walk us through the main drivers of the margin beat versus your expectations? Hi, John. Good morning. Thanks for the question. I'll start by saying we're pleased with our margin performance this quarter. What really drove our year-over-year margin increase was on the gross margin line. That increased 280 basis points, more than offsetting any SG&A and product sourcing costly leverage we incurred that we had largely expected in the quarter. The gross margin leverage was driven by 150 basis point increase in merch margin and then a 130 basis point decrease in freight expense. And as Michael noted earlier, the buying environment is very favorable. That really helped our markup, and that was the biggest driver in terms of our merch margin. In addition, we benefited from lower markdown as well as the lower shortage accrual, as I described in an answer to a previous question. The freight decline was driven by both lower ocean freight costs and lower domestic freight costs, including favorable fuel rates. So going forward, we expect freight savings to primarily come from the domestic freight line, as we have largely anniversaried the decline in ocean freight at this point. The balance of the P&L, including product sourcing costs and adjusted SG&A, was better than we expected, as our operating teams managed expenses very tightly during the quarter. Got it. I guess a follow-up for you, Kristin. Apart from the adjustment to the comp guidance in the second half, are there any other factors affecting the EBIT margin and the earnings guidance for the full year for fiscal 2023? And just on that note, it doesn't look like the Q2 earnings beat flowed through to the full year guidance. Just helpful—it would be helpful to understand your thinking here. Thanks. Thanks, John. It's a good question. Let me talk you through the puts and takes. As Michael described, we believe it's prudent to plan our back half sales at the +2% to +4% four-year comp stack. This is aligned with our multi-year or year-to-date trend, and then we know, of course, if the trend turns out to be stronger, we can effectively chase it. But this updated sales outlook results in a reduction in our fall sales and earnings plan. Full year total sales growth moderates from 12%-14% to 11%-12%. And overall, full year comp range narrows to 3%-4% from 3%-5%. The reason the low-end full year comp of 3% is maintained versus our original guide, that's really a function of rounding. The reduction in our second half sales and earnings plan offsets the earnings beat we saw in Q2. So as a result, after excluding the impact of the Bed Bath & Beyond lease acquisition cost, as a result, we're essentially maintaining the low end of our original comp sales and EBIT margin plan and then tightening the range of our adjusted EPS guidance. Got it. Thank you. Thanks, John. Alex Straton with Morgan Stanley, your line is open. Great. Good morning, Michael, Kristin. Thanks for taking the question and for all the helpful details so far. I just quickly wanted to dig in on the brief comment you made on student loans. Can you just speak to how you think about the impact of student loan repayments on your consumer going forward? And then I have a follow-up. Thanks. Well, good morning, Alex. Thank you for the question. Yeah, it's a good question. It's frankly difficult to know what the net impact of student loan repayments will be. You know, the way we've been thinking about it is that there's a direct impact and an indirect impact on us, and frankly, they could offset each other. And what I mean by that is the direct impact is that, you know, obviously, there is a subset of our customers who have student loans. And when the student loan repayments start back up in October, assuming that they will, then those customers will be affected. They'll have less money in their pockets, and that could impact their discretionary spending, including their spending at Burlington. And, you know, net, that's not a good thing. The indirect impact is that there's a much broader population of shoppers, who maybe don't shop at Burlington today, who will also be affected by student loan repayments, and maybe those shoppers will become more value-oriented. In my earlier remarks, you know, I talked about the potential trade-down shoppers in our stores. You know, it's possible that the end of the moratorium on student loan repayments could trigger more trade-down activity, and conversely, that would be a good thing. So the answer is, we don't know. It's very difficult to predict what the overall impact will be. That said, I feel like we've planned our business and we're managing our business. So I think we're in a pretty good position to react to no matter what happens. Thanks for that, Michael. Maybe Kristin, I think you mentioned freight as a benefit to the quarter briefly, in the prior question. Can we just revisit that? Maybe where does freight stand for you now, how we should think about that factor heading into the back half? Thanks a lot. Right. Good morning, Alex. Thanks for the question. Yeah, as we called out, we made good progress on freight as external freight rates have really moderated. By the end of this year, we would expect to recover about half of the freight delevers we've seen since 2019. Our teams have worked hard to renegotiate our freight contracts and take advantage of a softening freight market, both on ocean and domestic freight. And our outlook does factor in more favorable domestic contracts that we've made. Of course, diesel fuel prices could move that number around, so we'll see how that shakes out. Additionally, we are continuing to optimize our inbound and outbound transportation processes and are actively focused on several initiatives that drive transportation efficiency. While I'll say we don't think we'll get all the way back to 2019 freight as a% of sales, but there should be more opportunity to close that gap further beyond 2023. Thank you. Good luck. Thanks. Thanks, Alex. Chuck Grom with Gordon Haskett, your line is open. Hey, good morning. Thank you very much. If one of you guys could speak to real estate opportunities beyond 2023. I think you, you are targeting 70-80 stores next year, and maybe a little bit of color on, on how much the, the enterprise can handle, you know, over the next couple of years, 2024 and into 2025. And then one near-term follow-up would be just, category color in the second quarter. So wonder if you could talk about, all the areas and, and particularly touch on, on the home business. Sure. Well, good morning, Chuck. Thank you for the question. Yeah, as I said in the prepared remarks, we're very pleased with the former Bed Bath & Beyond leases that we've been able to acquire over the last few months. As you know, over the last few years, we've been trying to get up to 100 net new stores a year. The 62 leases we've acquired from Bed Bath & Beyond, together with our existing pipeline of potential new store locations. So it gives us some... quite a lot of confidence that we're going to be able to achieve that goal next year. Now, as you'd expect, as you ramp up new store openings, that puts pressure on things like our, well, our operating teams. You need to make sure that you have a bench of store managers and store associates. It also puts pressure on our delivery and distribution teams. You need to make sure that you can obviously deliver merchandise to those new stores. And we feel like we've gone through and we've done our homework, and, we're prepared for that, for next year. So we feel good about that. Now, I think you also, in your question, we're getting at, well, you know, what are the opportunities beyond this year and beyond 2024?... and I would say that in addition to the 62 leases that we've acquired from Bed Bath & Beyond, there's also a very attractive pool of additional store locations that will go back to the landlords from Bed Bath & Beyond. And they should sort of provide us with a pool of new store locations over the next two to three years, I would say. Now, obviously, there'll be other retailers interested in those locations too. We know that, but nevertheless, there's an expanded supply of retail locations, which is great. Now, also, I should add that although we're talking a lot about Bed Bath & Beyond, there are likely to be other retail closures and bankruptcies, and there have been, you know, smaller retail closures and bankruptcies so far this year. So we actually are feeling very bullish about the pool of potential locations. I guess I'd, I'd sort of sum up by saying, you know, we have the clearest visibility right now into 2024, and we're very confident we're gonna be able to expand our new store program next year. You know, as we look further out beyond 2024, we have slightly less visibility, but we have a growing confidence that there'll be an increased availability of attractive locations for at least a year or two after next year. Oh, I- sorry, on my mind- And then just category color. Sorry. Yeah, could you just provide some color on category color in the second quarter? And also, I'm also curious how your stores in higher income markets performed in the quarter. So two-part question. Thanks. I think I'll take the category question first. So in the second quarter, you know, our beauty, accessories, and footwear businesses were our strongest businesses. I think that's sort of been reported by other retailers, so not too much to call out there. I think those are the businesses the customer is really buying right now, and I think our merchants did a very nice job chasing into those businesses. In terms of comparison of home versus apparel, our home business was weaker than our apparel business on a one-year basis, but I think that's a little bit of an unfair comparison. Our home business has grown so strongly over the last three or four years. If you look at it on a four-year basis, our home business is well ahead of our apparel business. So it depends on the basis of comparison. Let me... I think the last part of your question was higher income stores in higher income locations. You know, we had talked a little bit about this earlier in the year. We regularly slice and dice our stores to understand underlying performance and the degree to which our sales trends are correlating with store characteristics or locations or demographics. And in the last 12 months, we've seen stronger comp performance in our stores that are located in relatively higher income areas versus lower income areas. That's notable because it's the opposite of what we've seen historically. That said, you know, it's consistent with sort of the external macroeconomic environment. You know, since early 2022, lower-income customers have had a tougher time than other income groups, so it's not surprising that the relative performance of our stores that are in, you know, higher income versus lower income areas, is stronger. Now, obviously, compared with peers, we have a smaller mix of stores in those higher income areas. Our store base tends to skew much more heavily towards low to moderate income areas. So, yeah, we believe that those lower income stores are gonna come back over time and perform very strongly once we're through this cycle. But right now, the stores in higher income areas are outcomping the stores in lower income areas. Great. Thank you. Thanks, John. Adrienne Yih with Barclays, your line is open. Great. Thank you very much. My first question is, can you discuss the traffic trends during the quarter? And then relative to your basket, whether that's, you know, if you wanna break it down to AUR and UPT, that would be great. And then my second question is, you know, in each of these kind of Burlington 2.0, the three kind of big areas, merchandising, the distribution center, right, investments in there. And then, Kristin, you kind of talked and alluded to about the, the store, the kind of store progress. So maybe on the first two, just where, where are you in that journey? It sounds like the merchant teams are performing and delivering the productivity that you want, but if you can also give me an update on kind of the investments you've made in getting those DCs to act as sort of off-price infrastructure for you. Thank you very much. Well, thank you, Adrienne. Why don't... Kristin, why don't you take the question on basket size, and then I'll take the question on Burlington 2.0 investments. Sounds great. Good morning, Adrienne. So overall growth in transaction is really what drove the comp for the quarter. So it's primarily higher traffic, but also higher conversion. We also saw gains in higher units per transaction, higher UPT, but that was largely offset by lower AUR as we've expanded opening price points, as we've discussed. Perfect. And then, Adrienne, on the second part of your question, I'm gonna sort of take a broad approach to this. I think it's probably worth, you know, first of all, just stating the key elements of Burlington 2.0. You know, Burlington 2.0 is all about providing the strongest value that we can by executing the off-price model more effectively. That means shaping the trend based upon what the customer is telling us and focusing on off-price, opportunistic buying. And then from an operating point of view, getting those receipts out to the floor in a timely and cost-effective way, providing a flexible store environment and driving improved new store economics by reducing the size of the store. So those are all the bits of Burlington 2.0. You know, as we think about it internally, we think about that as sort of four main buckets of activity or investment, if you like. You know, the first is merchandising, which I'll come back to. Second is store operations. Third is real estate, and the fourth is supply chain. You know, on merchandising, we've been, you know, from, you know, since 2019, we've been strengthening our merchandising capabilities. It's really a sort of core element of Burlington 2.0. Now, since 2019, we've invested in growing the merchant team, and then we've also invested in new tools, systems, and processes for the merchants, something we call Merchandising 2.0. We began rolling out those new tools earlier this year, and the reception from the merchants has been terrific. Now, do I think that they're having an impact and helping us to improve our execution? Maybe. You know, I actually feel very good about our execution this year, and maybe those tools are starting to have an impact. But I think most of the benefit is yet to come. I think over the next couple of years, I really think we can drive much greater value out of the investments that we've made in merchandising. Let me move on to store operations. You know, we, we've done a number of things in the last few years to make our stores more flexible, so we can chase sales or pull back based upon the trend, and we've also had a lot more focus on getting receipts out to the floor. Now, you know, we faced some headwinds because, you know, wages have gone up over the last three years. There've been labor shortages in some markets, so that hasn't necessarily gone as smoothly as we would like. But again, I feel pretty good about the progress that we've made there. We're much more flexible in our stores now than we were back in 2019. The third bucket, real estate, I'm not gonna talk a lot about because I feel like we've already covered it in some depth today. You know, our real focus with real estate is to open more stores and to open them using a much more economically advantaged format, which is our smaller store format, and we're pleased with the progress we're making there. And then on supply chain, again, there are a number of things that we've been doing over the last few years in freight and supply chain to get our supply chain and transportation system much more flexible, much faster in moving goods. Again, we've run into some serious headwinds just in terms of the freight constraints, the higher freight rates, et cetera. And I feel like this year we've made some real progress in driving down the freight costs. Obviously, we've been helped by that in terms of what's happening externally. And we're also working very hard to drive down supply chain costs. That's gonna take a little bit longer, but I think we have some, we have some good initiatives underway to sort of drive progress there in the next year or two. Thank you. That is incredibly helpful, and best of luck. Thank you. This concludes the time allotted for the Q&A session. I will now turn the call back over to Michael O'Sullivan for closing remarks. Let me close by thanking everyone on this call for your interest in Burlington Stores. We look forward to talking to you again in late November to discuss our third quarter results. Thank you for your time today. This concludes today's call. We thank you for your participation. You may now disconnect.